Naidu to Banks: Widen Credit Flow or SLBC Meetings Serve No Purpose

Andhra Pradesh Chief Minister N. Chandrababu Naidu on Wednesday directed banks operating in the State to step up lending to all sectors and sections of society, describing a wider flow of credit as essential to strengthening the State's economy and ensuring inclusive growth.

Addressing the 236th meeting of the State Level Bankers' Committee (SLBC), Mr. Naidu said banks should ensure that credit reached every section and sector in keeping with the State's development priorities.

The Chief Minister noted that lending to Micro, Small and Medium Enterprises (MSMEs) had increased compared with the previous period, but said the level of disbursement was still below expectations. Some banks, he added, were lagging considerably in achieving their lending targets. MSMEs are among the largest employers in the State after agriculture, which makes the pace of their credit flow closely tied to overall economic activity.

“There is no point in conducting SLBC meetings unless the targets are achieved,” he said, stressing the need for banks to translate decisions taken at such meetings into measurable outcomes.

SLBC meetings bring together banks, the State government and financial regulators to review credit flow and set lending targets, particularly for priority sectors such as agriculture, small industry and weaker sections. The committees operate in each State, with a designated lead bank coordinating the exercise.

Mr. Naidu said the State government wanted Andhra Pradesh to emerge as the country's leading State in implementing the PM Surya Ghar scheme, the Union government's programme to promote rooftop solar installations in households through a central subsidy. That goal, he said, would be possible only if banks extended loans on a large scale to households seeking to install rooftop solar systems.

On the State's economic goals, the Chief Minister said Andhra Pradesh had set a target of 15% growth, but the impact of El Niño had created difficult conditions. El Niño is a periodic warming of the Pacific Ocean that is associated with weaker monsoon rainfall and drought conditions in parts of India. Mr. Naidu said his government was working to overcome these adverse factors and remain on the growth path.

The Chief Minister also called upon banks to ensure adequate credit to tenant farmers, who often face difficulties in accessing institutional finance. Tenant farmers generally cultivate land owned by others and frequently lack the land titles that banks accept as collateral, which restricts their access to formal loans.

He commended women members of self-help groups (SHGs) for their record in repaying bank loans, saying they had emerged as a model for repayment and occupied the top position nationally in this regard. More than 99% of the women who had availed themselves of loans were repaying them on time, while only 0.67% had defaulted, he said. SHGs are small collectives, usually of women, that pool savings and access bank credit together.

Mr. Naidu asked banks to focus on recovering loans from the small share of women who had defaulted, and to explore the possibility of a one-time settlement (OTS) mechanism to facilitate recovery. An OTS allows a borrower to clear an overdue loan at a mutually agreed, reduced amount, typically in a single payment.

The meeting concluded with the Chief Minister repeating that credit targets set for banks should be treated as commitments, and that the State would track progress ahead of the next review.